ITAT slaps ₹10,000 Cost on Assessee for Failure to Justify Non-Compliance in Appellate Stage while remitting ex-parte NFAC Order [Read Order]

The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) recently delivered a bittersweet decision for an Appellant, slapping a cost of  ₹10,000 on the Assessee for not adequately complying with the Appellate Authority during the appeal stage, while remitting the ex-parte order passed by the National Faceless Appeals Centre (NFAC) for fresh adjudication.

Two Income Tax Appeals bearing similar issues were filed by Hanubhai Devabhai Rathod against the Income Tax Officer with regards to the Assessment Years (A.Y.) 2016-17 and 2017-18.

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The facts follow the Assessee’s declaration of total income of ₹6,70,700 for A.Y. 2016-17. The Assessing Officer (AO), upon receiving information that the Assessee had conducted financial transactions of ₹24,63,386 including a cash deposit of ₹5,15,000 and purchase of two shops for a total consideration of ₹24,35,800, proceeded to reopen the case of the Assessee under Section 147 of the Income Tax Act, 1961.

The Assessee remained non-compliant during the reassessment proceedings resulting in income tax additions of all the disputed amounts. The Assessee’s appeal before the CIT(A) was dismissed leading to the present Appeal impugning the Order passed by the CIT(A).

Mahesh Chhajed, appearing for Hanubhai Devabhai Rathod contended that the CIT(A) failed to meritoriously assess the additions made by the AO and passed an ex-parte therein.

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Whereas, Rignesh Das representing the Department laid reference to the Assessee’s failure to comply before the CIT(A) in spite of 4 opportunities and failed to appear during the proceedings as well.

The two-member Bench of T.R. Senthil Kumar, Judicial Member and Narendra Prasad Sinha, Accountant Member observed that the Assessee had been entirely non-compliant and non-cooperative during the Appellate proceedings, however took into account an affidavit filed by the Assessee claiming that his Chartered Accountant had erred in regulating the compliance procedures.

Observing that the Assessee had provided his own email ID for communication, the Bench held that the Assessee cannot shift blame to any third person and proceeded to impose a cost of ₹10,000 on the Assessee to be paid to the Income Tax Department within 15 days of the Order.

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Additionally, the Bench remarked that the Income Tax Additions cannot be duly adjudicated without providing the Assessee another opportunity of hearing, and set aside the matter to the file of CIT(A) to grant the Appellant another opportunity of being heard.

To Read the full text of the Order CLICK HERE

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